The decision to start a family is enormous. It means you’ve reached a point in your life that you and your partner feel comfortable to take the next steps. There are several levels within this process. One of them relates to the state of your finances.
In particular, maintenance of your credit. This is an important level because if your credit isn’t properly managed, that affects other personal finance tasks. For instance, substandard credit can hold you back from the purchase of a home or a safer car. To prevent these issues, here are 7 tips for managing your credit as you start a family.
1. Check Your Credit Score
This is the most critical factor, and it’s a number some people don’t look at on a regular basis. However, they need to, so they can plan the next steps connected to acquiring any type of loan. 650 is the average score for most. Anything higher is good, while anything lower minimizes changes to obtain a loan.
To be credit smart, check your reports. You can get free reports from the credit report company or through an aggregate that’s connected to your credit card.
2. Settle Out Unpaid Debt
There might have been a time in your past where you weren’t so good with credit. As a result, there are unpaid bills on your record that have gone to creditors. Don’t let these hang around while you start a family. Instead, see if they can be settled out.
There are plenty of debt relief companies that mediate between individuals and collectors to get the best payout offer. Some of them, such as Alleviate Financial, work with those with unpaid balances to create a credit card debt settlement.
3. Determine Your Debt-To-Income Ratio
One thing that helps determine your standing to be approved for a loan is how much debt you have versus your income. If income is higher, the chances for a loan are the same. If the debt is higher, then it could be harder to get a loan.
You can obtain this value in two ways. First, calculate it on your own. Take the total of your monthly payments and compare the amount to your net income. The second way is to apply for a loan. If you’re denied, one of the reasons might be a poor debt-to-income ratio.
4. Stop Using Credit
The best way to avoid credit pitfalls is to stop utilizing them. As many have said before, don’t buy it if you can’t afford it. Credit cards provide an illusion that you have available funds.
To start a family you want to leave within your means. The first way to do that is to eliminate the use of your credit cards. It will be tough at first; however, you’ll eventually realize they hurt you more than they helped.
5. Pay Your Bills On Time
If you want to start a family, you can’t have unpaid bills. If so, you may end up without electricity, water, or a vehicle. Plus, unpaid bills prevent you from getting credit when it’s absolutely needed.
Pay your bills on time. Don’t wait for the last minute to make a payment. Some companies charge a fee if you’re even one day late. Early payment takes that burden off your list.
6. Dispute Any Inaccuracies
An inaccuracy on a credit report is not as uncommon as you think. There are times when a provider sends incorrect information to a reporting bureau. As a result, it gets tacked on and lowers your score.
The first way to address this is to regularly review your credit report. If there is a discrepancy, then file an immediate dispute with the reporting company. They’ll contact the provider to see if there’s an error and correct it if needed.
7. Don’t Over-Purchase On Credit
As mentioned above, you should only spend what you have available. This keeps your debt down as well as the urge to use a credit card. The latter will be tough when you plan for a family.
There are so many items to purchase to prepare for a new family member that’s it’s tempting to pull out a credit card or sign up for a new one. Try to avoid these traps at all costs.